Calling the Shots: Matters of Membership

• Author: Allan C. Hutchinson
• Pages: 269-289

269



Cain e Sots:

  

e corporate world is ver y competitive, very cut-throat, and very

nondemocratic. e corporation is structured like no democracy

anywhere.

~ Frank Lopez

A    else in the law of corporate governance, the ghosts

of Berle and Means continue to exert a chilling inuence. In responding

to those who claimed that modern corporations had become so pow-

erful that its managers must consider themselves “guardians of all the

interests which the corporation aects and not merely servants of its

absentee owners,” Adolph Berle insisted that “you cannot abandon em-

phasis on the view that business corporations exist for the sole purpose

of making prots until such time as you are prepared to oer a concrete

and reasonably enforceable scheme of responsibilities to someone else.”

When m anagement faces sit uations i n which i t is impos sible to ad vance

shareholder interests and, at the same time, to protect non-shareholders

from harm, the answer is that management should make tradeos be-

tween shareholder and non-shareholder interests, balancing the harms

and benets more or less equitably. at gives awesome power to the

presently constituted board of directors, which seem ill-equipped to

PART THRE E: MOVING FORWARD

270

make such public decisions. Consequently, extending the scope and

nature of the duciary duty that the board of directors is charged to

meet is only the rst step in mak ing corporations more democratic in

performance and practice (see chapter ). It is imperative that substan-

tial changes be made in the method for selecting and controlling the

representatives who are entrusted with the responsibility to discharge

decisions in the best interests of the corporation as a whole.

One of the central challenges for a new and transformative approach

to corporate governance is to demonstrate the why,who, and how of

any proposed democratic reforms. It is as much a matter of practical

demonstration as theoretical reection. As Jan van de Snepscheut, a

Dutch mathematician, put it (or was it Yogi Berra?), “in theory, there

is no dierence between theory and practice, but, in practice, there

is.” Working from the practical ground up, I propose not only to make

the board owe duties to a much more expansive array of stakeholder

interests but also to change the entire structure of the corporation in

terms of the identity, representativeness, and role of the directors. It

is not enough to instruct corporate boards to consider wide-ranging

social interests and broader public values in making decisions. Moreo-

ver, it is not even enough to mandate that such interests be consid-

ered, their priority calibrated, and formulations made on what is to

be done. It is essential that those interests be as fully and as directly

represented as possible in the boardrooms of Canada’s larger corpora-

tions; there must be an end to cronyism. It is only when that is done

that there will be a genuine opportunity for an advancement in demo-

cratic governance among and within corporations. Indeed, it is only

when corporations can claim to be truly representative in composi-

tion and ambition that Canadian society will be able to make good on

its general commitment to democracy. Democracy is not only for the

people but of the people .

 

A    democracy strongly suggests

that any eorts which increase the opportunities for persons to be in-